Business Operations
8 min.

What Is a Franchise, and How Do You Manage It?

Véronique Forest
Last updated on 25 Aug. 2023
Published on 11 May. 2023
main qui tient une boussole qui pointe vers une maison, un diagramme, une horloge, des humains.

For more and more people, opening a franchise has become an appealing proposition.

Table of contents

In fact, according to the Conseil québécois de la franchise, the number of franchisors has grown 5.7% annually since 2017. And the yearly revenue generated by the franchise industry stands at some $60 billion.

But what is a franchise, exactly? It’s a somewhat different business model than a typical business. A franchise is a company that operates an established and recognized brand but remains completely independent.

This means that the franchisee sells the products or services of the franchisor, who will share their expertise and brand image in exchange. The franchisee generally pays a percentage of its sales to the franchisor.

Thinking of starting a franchise, but want to learn a bit more first? You’re in the right place.

Why open a franchise?

Although opening a franchise might sound like a complicated undertaking, many people find this business model very attractive. The franchise industry is an appealing business option for several reasons:

  • Benefiting from a proven business concept
  • Having help starting and managing the business
  • Having an established customer base
  • Making faster profits
  • Not having to worry about marketing and advertising
  • Enjoying lower operating costs and greater purchasing power
  • Having a lower bankruptcy rate thanks to the franchisor’s help

However, there are also cons to opening a franchise. Franchisees often have to invest more money up front, especially if the banner they wish to open is well-known.

In addition, franchisees cannot run their business as they wish since they must follow the guidelines of the franchisor. They also have to pay a portion of their sales to the company. The work hours can be very long and leave little room for work-life balance.

Finally, a franchise agreement is not to be taken lightly since it is a major financial commitment that can be binding for many years.

Opening a franchise can be an interesting avenue for entrepreneurs who want to have a turnkey project. However, if you’re the type of person who wants to have the leeway to do what you want in your business, it may not be the right model for you.

Employee management simplified.

Online work schedules. Time clock. Communication.

Discover Agendrix

How does one become a franchisee?

Becoming a franchisee isn’t quite as easy as one might think. From the moment you’re thinking about going into business up until you actually open your doors, it can be a lengthy process.

If you’re interested in becoming a franchisee, here is a snapshot of the steps involved.

1. Measure your level of interest

Before embarking on the adventure of a franchise, you’ll need to check in and ask yourself if you have the right profile for such an undertaking. Here are some questions that will help you find clarity:

  • What are your motivations for becoming a franchisee?
  • What kind of work/life balance do you want to have?
  • What types of tasks do you want to do at work?
  • How much do you know about business management?
  • Are you comfortable managing a team?
  • Are you able to recruit and train staff adequately?

You can also discuss these points with people around you to get an outside opinion.

2. Narrow down the industry that interests you

When we think of a franchise, the first thing to come to mind is often a restaurant. However, there are franchises in many different industries, from hair salons to grocery stores, pharmacies, garages, and more. Ask yourself where your interests lie and what industry would work best with your knowledge and skills.

Don’t hesitate to talk to franchisees to help you pinpoint the right industry. You will have a better idea of their realities and be able to make a more informed choice.

3. Evaluate your budget

Your budget should include all potential expenses such as entrance fees, legal fees, applicable royalties, your working capital, etc. To be sure your plan is realistic, make it a point to surround yourself with experts.

You can also speak to banks in order to find the financing you will need for the venture.

4. Choosing a franchise and drafting a business plan

Now that you’ve determined your target industry, it will be easier to choose the right franchise. Ask various franchisors to tell you about how they do things. Make sure that the banner you choose will be able to support your desired approach.

Once you’ve settled on a choice, write up a detailed business plan to start on firm footing and make sure your project is realistic.

5. Find a location

Finding a good location for your future business is key since it will directly impact your operations. In your research, don’t forget to take into account the presence of nearby parking, the rental or purchase cost, any construction planned by the city in the short, medium and long terms, the presence or absence of public transportation, etc.

In some cases, franchisors also have a list of criteria that you will need to meet when choosing your location. So make sure you pick a spot that meets your expectations and the franchisor’s requirements.

6. Create the company

As a franchisee, you are responsible for setting up and properly registering your business. Since these are legal details, it’s a good idea to see an expert to make sure your administrative process complies with current laws.

7. Sign the contract with the franchisor

Becoming a franchisee comes with a number of responsibilities. Of course, the franchisor will not let you use its image unless you meet certain obligations.

Generally, a franchisee must:

  • Find the location for the business
  • Complete all the administrative steps to open the company
  • Pay royalties to the franchisor
  • Uphold the image and concept of the franchisor
  • Diligently apply the franchisor’s business strategy
  • Undergo proper training
  • Recruit and train employees
  • Buy things from suppliers designated by the franchisor

In addition, your contract with the franchisor is not to be taken lightly. Make sure you understand it thoroughly and have it double-checked by professionals to make sure it contains all relevant clauses, such as the terms for entering and leaving the network.

8. Set up your new place of business and launch

You are almost ready to launch! All that’s left is to fit out your premises, get your business up and running, and launch your brand new venture!

Don’t hesitate to advertise your business opening. You can contact the local press, make posters, invite your local elected officials, launch a contest on social media, etc.

Tips for more easily managing your franchise

You need to have the right skills and know-how to make your venture a success. Beyond being an entrepreneur, you will also be a manager and will generally have to manage employees, especially if your business grows.

It will be essential for you to hone your management skills in order to make sure things work out well.

Develop your leadership

As a franchisee, you will have to manage employees. This will take leadership skills.

What the best managers have in common:

Don’t hesitate to train yourself in order to develop the skills to properly manage your employees. You can do some reading, listen to podcasts, seek help from a coach or mentor, take specialized training, etc.

Leadership is something one develops and works on over time. If you put in the necessary effort, you can become an outstanding manager.

Use the right employee management tools

Your choice of tools for managing your business is very important. The right tools will make your life so much easier.

First, check if your franchisor requires the use of certain software. If so, make sure you are proficient in these programs. If you have the freedom to choose, don’t hesitate to compare several tools before making your choice.

For example, get scheduling software that allows you to manage schedule creation and sharing, track work hours, and streamline communication with your employees. Make sure that the software is easy to use and easily accessible to your employees.

You can standardize your schedule creation using rotating schedules, for example.

Some software such as Agendrix even let you manage all your HR in one place. This will allow you to centralize employee HR records, get feedback through anonymous surveys, and give employees recognition on a daily basis.

Put the right processes in place

For your new business to run smoothly, a multitude of processes are going to need to be established. To help you in this respect, you can turn to free online resources and adjust them to your situation.

Here are some examples of helpful resources you can use:

Set up an effective recruitment process from the get-go to make it easier to hire team members. This will enable you to recruit the workers you need for your business. Using a Recruting CRM Software can make things a lot easier!

And don’t neglect onboarding—this will go a long way to providing a good employee experience.

Your adventure awaits

Now that you have a better idea of what it takes to open and run your own franchise, you’re ready to take action and embark on your new adventure.

Who knows where it will lead? Anything is possible!

Discover Agendrix.
Manage better.

Up to 21 days of free trial. Easy setup. Cancel anytime.